KrisEnergy

KrisEnergy: CLSA initiate coverage with a BUY and a DCF-derived TP of $1.58, implying a 22% upside. CLSA see near-term upside to production from two key projects in the Gulf of Thailand. These assets could lift net production by more than 8,000 boepd of mainly liquids. House don’t expect full production from these projects until 2016/17, but there is upside risk to timelines. In addition, two exploration wells are being or are just about to be drilled in the large prospective resource of blocks 105 and 120 in Vietnam. Keppel Corp has bought three chunks of KrisEnergy since 2012 and is the most likely buyer of additional stakes as First Reserve might seek to exit. CLSA questions if KrisEnergy could morph to become the oil and gas division of Keppel Corp, with a possible whitewash resolution of the takeover and merger rules that typically require a general offer, Keppel could acquire more stock. The stock has edged higher since its IPO and is trading close to its current underlying NAV. Further upside will come from exploration success and the timing of new production.